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  • FIRST POST
    • capital0ne
    • By capital0ne 5th Mar 18, 7:08 PM
    • 474Posts
    • 236Thanks
    capital0ne
    Property or Finacial Assets
    • #1
    • 5th Mar 18, 7:08 PM
    Property or Finacial Assets 5th Mar 18 at 7:08 PM
    I'm sure we all know this and of course you should be invested in a balanced diversified portfolio of bonds, gilts, equities, cash and property to suit your risk profile.

    But to answer an age old question - property or financial assets?

    Most people today would say property - buy to let is (was) popular amongst most people who don't understand or trust pensions (SIPPs /ISAs). So here's a little chunk from the Telegtaph today.

    1 invested in UK Stock in 1900 would be worth 566 today after accounting for inflation. (Credit Suisse research),

    House prices over the same period has only risen seven-fold i.e 1 in housing in 1900 would only be worth 7 now.

    The best performing property market. Australia has only risen 13-fold in the same period of time. In all cases accounting for inflation.

    In America it's just held even.

    So its financial assets all the way.

    Residential housing is worth $170trn around the globe.

    That's almost exactly the sum of all outstanding bonds ($100trn) and equities ($70trn).
    And gold lags behind at only $6.5trn for all the gold ever mined.

    And there we have it
Page 1
    • curious squirrel
    • By curious squirrel 5th Mar 18, 7:40 PM
    • 11 Posts
    • 3 Thanks
    curious squirrel
    • #2
    • 5th Mar 18, 7:40 PM
    • #2
    • 5th Mar 18, 7:40 PM
    Excuse the newbie question (I'm trying to learn), does this include the rental income from property?
    • greatkingrat
    • By greatkingrat 5th Mar 18, 7:44 PM
    • 97 Posts
    • 90 Thanks
    greatkingrat
    • #3
    • 5th Mar 18, 7:44 PM
    • #3
    • 5th Mar 18, 7:44 PM
    I don't think you are comparing like with like. Presumably the figure for shares includes reinvesting dividends, however for property you are only looking at the capital growth and not 117 years of rental yields.
    • BananaRepublic
    • By BananaRepublic 6th Mar 18, 7:47 AM
    • 1,191 Posts
    • 871 Thanks
    BananaRepublic
    • #4
    • 6th Mar 18, 7:47 AM
    • #4
    • 6th Mar 18, 7:47 AM
    It's not a fair comparison. Until recently there were amazing benefits from property. You could offset the rental income agains the mortgage and hence significantly reduce your tax bill. In effect the tenant was paying all or most of your mortgage with little or no tax to pay. The rules are changing so it is becoming much less lucrative.

    Secondly the way to compare is wrong. Property bought with a mortgage is geared. You put in say 20% of the value, and gradually pay off the mortgage, which is reduced year by year due to inflation, and the property goes up hugely in comparison to that initial investment. So although you pay mortgage interest, it is a very good way to invest as you are getting a cheap loan.

    You said it yourself at the start, you should have a balanced portfolio. The best property investment is your own home of course, and that should be a priority. Personally I am not one for investing in BTL, too much hassle, and the tax advantages are less now. Stocks and shares are my choice, along with my own home, but others may well make other equally valid choices.
    • msallen
    • By msallen 6th Mar 18, 8:08 AM
    • 805 Posts
    • 890 Thanks
    msallen
    • #5
    • 6th Mar 18, 8:08 AM
    • #5
    • 6th Mar 18, 8:08 AM
    Other than this comparison not including income from property, I struggle to believe it has only increased 7-fold.
    My parents lived in the same house from 1954 until 2014, so 60 years. i.e. approximately half of the period (although of course prices wouldn't have increased steadily over the whole 118 years, and one house is not representative of the whole market). They bought it for 650 and sold it for 225,000 - a 346-fold increase.
    • noh
    • By noh 6th Mar 18, 8:39 AM
    • 5,229 Posts
    • 3,528 Thanks
    noh
    • #6
    • 6th Mar 18, 8:39 AM
    • #6
    • 6th Mar 18, 8:39 AM
    Other than this comparison not including income from property, I struggle to believe it has only increased 7-fold.
    My parents lived in the same house from 1954 until 2014, so 60 years. i.e. approximately half of the period (although of course prices wouldn't have increased steadily over the whole 118 years, and one house is not representative of the whole market). They bought it for 650 and sold it for 225,000 - a 346-fold increase.
    Originally posted by msallen
    I think the figures are adjusted for inflation.
    My late grandfather bought his house in 1926 for 500. It would be worth over 500k now 1000 times more. Adjusted for inflation this would be around 17 times more it is in a London borough though.
    Here is a link to an inflation calculator.
    http://www.in2013dollars.com/1926-GBP-in-2017
    Last edited by noh; 06-03-2018 at 8:42 AM. Reason: Missing link!
    • movilogo
    • By movilogo 6th Mar 18, 9:02 AM
    • 2,336 Posts
    • 1,569 Thanks
    movilogo
    • #7
    • 6th Mar 18, 9:02 AM
    • #7
    • 6th Mar 18, 9:02 AM
    If you can manage property then property is good investment especially for cash flow.

    Otherwise stocks are easier to manage. Stocks won't call you at 2 AM for blocked toilet
    Happiness is buying an item and then not checking its price after a month to discover it was reduced further.
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